Merkel coalition agrees welfare changes as poll looms

BERLIN (Reuters) - German Chancellor Angela Merkel's centre-right coalition reached agreement on Monday on contentious social welfare issues that it hopes will bolster its support in the countdown to federal elections next September.

After nearly eight hours of talks that underlined the degree of discord simmering within her three-party government, Merkel and other leaders agreed to scrap an unpopular health surcharge and to introduce extra child benefits, coalition leaders said.

Merkel's junior coalition partners, the pro-business Free Democrats (FDP), are particularly eager to impress voters after opinion polls have regularly shown them failing to clear the five percent threshold for staying in parliament next year.

The FDP has long had to accept that tax cuts, one of the party's traditional policy cornerstones, are not possible at a time of fiscal austerity, with Merkel leading the euro zone's efforts to overcome its three-year-old sovereign debt crisis.

Instead, the FDP has pushed hard for abolition of the 10-euro-per-quarter payments for visits to the doctor, saying they have spawned red tape without reducing waiting times.

Merkel's FDP health minister, Daniel Bahr, rejected the centre-left opposition's charges that the deal amounted to an attempt to bribe voters ahead of a state election in Lower Saxony in January and federal elections in September.

"This is about helping our citizens. It's not about whether opinion polls are better are worse from week to week but making the right decision for Germany," Bahr told German radio.

The coalition, plagued by squabbles since taking power in 2009, aims to balance Germany's budget by 2014, helped by robust economic growth that has bucked the euro zone trend, although strong tax revenues are expected to tail off next year.
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